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Executives

Staci Mortenson - Senior Vice President

Lars Björk - Chief Executive Officer, President and Director

William G. Sorenson - Chief Financial Officer, Treasurer and Secretary

Analysts

John S. DiFucci - JP Morgan Chase & Co, Research Division

Keith Weiss - Morgan Stanley, Research Division

Chris Koh - Stifel, Nicolaus & Co., Inc., Research Division

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

Nicole Hayashi - UBS Investment Bank, Research Division

Ross MacMillan - Jefferies & Company, Inc., Research Division

Shawn Yuan - Roth Capital Partners, LLC, Research Division

Jesse Hulsing - Pacific Crest Securities, Inc., Research Division

Robert Chen - Citigroup Inc, Research Division

Greg McDowell - JMP Securities LLC, Research Division

Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division

Qlik Technologies (QLIK) Q2 2012 Earnings Call July 26, 2012 5:00 PM ET

Operator

Good day, ladies and gentlemen, and welcome to your QlikTech Second Quarter 2012 Earnings Conference Call. [Operator Instructions] And as a reminder, today's conference is being recorded.

And now, I would like to introduce your host for today, Staci Mortenson. Please go ahead, ma'am.

Staci Mortenson

Thank you, operator. Good afternoon, and thank you for joining us today to review Qlik Technologies' second quarter 2012 financial results. With me on the call today are Lars Björk, Chief Executive Officer; and Bill Sorenson, Chief Financial Officer. After prepared remarks, we will open up the call to a question-and-answer session.

During this call, we may make statements related to our business that will be considered forward-looking statements under the federal securities laws. Words such as, but not limited to, predicts, plans, expects, anticipates, believes, goal, target, estimate, potential, may, will, might, momentum, could, seek and similar words will identify forward-looking statements. These statements reflect our views only as of today and should not be relied upon as representing our views as of any subsequent date. These statements reflecting our current views regarding the future are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's EDGAR system and our website. We encourage all investors to read our SEC filings.

Qlik Technologies expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements made herein, except as required by law.

Additionally, non-GAAP financial measures will be discussed on this conference call. A reconciliation to the most directly comparable GAAP financial measures can be found in our press release, which is available at our website, www.qliktech.com, under the Investor Relations tab. Also, please note that our webcast of today's call will be available on our website in the Investor Relations section.

With that, I'd like to turn the call over to our Chief Executive Officer, Lars Björk. Lars?

Lars Björk

Thanks, Staci. And I'd like to start by thanking all of you for joining us today. For the second quarter 2012, we reported total revenue of $85.8 million, representing an increase of 16% over the prior year period. On a constant currency basis, total revenue grew 24% over the prior year period. Even with a challenging macroeconomic environment, we were still able to show a substantial year-over-year growth. This further reinforces that QlikView delivers rapid value, and this is even more important in today's tough business condition. Businesses of all sizes are dealing with a deluge data and need QlikView to transform this data into knowledge by making it understandable and actionable.

Our non-GAAP operating income for the quarter was $2.4 million, and non-GAAP net income was $0.02 per diluted common share.

As we discussed with you on our preannouncement call a few weeks ago, the macroeconomic environment posed some challenges for QlikTech, particularly in Europe. We saw prolonged sales cycles causing delays, some strengthening of deal sizes to help get through procurement and customers need for additional signatures for further ROI justification.

We believe that the deal that flipped largely remain in play and are very hopeful that we will be able to close the meaningful portion before year end.

We did not see any adverse changes in the competitive landscape or pricing pressure and continue to believe that we are gaining market share. Our focus now is on adapting to the new sales environment. This requires more legwork to identifying qualified deals, as well as more rigor to move deals through the pipeline from commit to close. We are improving our processes to ensure we have the proper resources to support pipeline development and deal closure and are better aware of all the requirements. We're also broadly evaluating our sales methodologies to help ensure we are applying best practices across our direct and indirect teams, as well as partners. We continue to believe that the market opportunity remains large and there's a real demand for our solutions. We believe the steps we are taking will better position us to navigate through current business conditions.

With that said, let's spend a moment with some of additional business highlights from the quarter. We are excited about the acquisition of Expressor Software. Their metadata management software fulfills our customers' growing need to describe data consistently and then reuse it to speed up deployment of additional application. We believe this metadata-intelligent solution will be an expanded use of our Business Discovery platform and will help IT departments know what data is being used and how it's being used, while ensuring consistency and appropriate reuse of common data definitions. This is a capability that has become increasingly important especially for enterprise deployment. The initial response has been positive, and we are seeing interest within our installed base. In addition, Expressor fits squarely in our acquisition strategy of adding complementary tuck-in technology that enhances the value we provide to our customers, and we are very pleased to have this team on board.

As we have discussed with you, expanding partnerships is one of our key initiatives. On the front, we are pleased to announce that we have joined the Google Cloud Platform Partner Program as the technology partner on their BigQuery initiative. BigQuery takes advantage of Google's massive computing power. Customers can store as much data as needed and pay only for the usage. The data is protected with multiple layers of security, replicated across multiple data centers and can easily be exported. QlikView and Google BigQuery integration allows users to access big data in real-time, visualizing the information and deriving value from it. The goal of the integration is to provide seamless business discovery capability for the business users on very large data sets by leveraging the value of the BigQuery platform. With QlikView's associative experience, business users can navigate through massive amounts of data to find what's relevant to them and get answers to their specific business questions without requiring technical skills.

We also continue to expand our relationship with Deloitte this quarter. Deloitte Consulting U.S. will be leveraging QlikView to help them gain better visibility into their operational performance using a QlikView application. In addition to Deloitte U.S. consulting team in Qlik, they're codeveloping a comprehensive go-to-market approach as part of the growing alliance relationship. Also, Deloitte Canada has signed a new partnership with Qlik by seeking to further grow in market in North America.

We're in the first phase of our call for solutions for QlikMarket. We're off to a good start with a substantial number of partners applying to participate in many solutions ranging from U.S. spatial mapping to data connectors to unique Russian insurance solution. Our plan remains to officially launch later this year.

Our efforts to drive new customer adoption and increase penetration across existing customers were evident again this quarter. We ended the quarter with approximately 26,000 customers. One example of a customer we've been able to scale with is Allina Health. Allina is a health care system dedicated to the prevention and treatment of illness and enhancing the greater health of individuals, families and communities throughout Minnesota and Western Wisconsin. Allina, with its network of 90 clinics, 11 hospitals and 24,000 employees, is using QlikView to support its enterprise business infrastructure. More than a thousand users utilize QlikView everyday to support the organization's performance improvement initiative.

Before turning the call over to Bill, I would like to reiterate that while the challenging environment is impacting our current growth rate, it doesn't temper the strength of our product or our large market, and we remain confident in our long-term growth opportunity.

With that, let me turn the call over to our CFO, Bill Sorenson.

William G. Sorenson

Thanks, Lars. I'd now like to provide further details on our financial performance during the second quarter of 2012, followed by our guidance for the third quarter and full year 2012.

Total revenue was $85.8 million, up 16% over the same period last year. On a constant currency basis, total revenue increased 24% year-over-year. Within total revenue, license revenue increased 10% over the same period last year to $50 million. On a constant currency basis, license increased 18% year-over-year.

Maintenance revenue was $28.6 million for the second quarter, increasing 31% over the same period last year and indicative of our increased focus on maintenance renewals, as well as the ongoing value our products provide. On a constant currency basis, maintenance increased 41% year-over-year. Professional service revenue was $7.2 million, increasing 4% over the same period last year and 11% in constant currency year-over-year.

We had another quarter of healthy growth in the Americas, with revenues of $28.9 million or 34% of total revenue, increasing 27% year-over-year and 30% year-over-year on a constant currency basis.

Revenue from Europe is $48.7 million or 57% of total revenue, increasing 9% year-over-year or 20% year-over-year on a constant currency basis. As we discussed with you a few weeks ago, our European territories, overall, were most impacted by the challenging macroeconomic conditions, but we still saw solid constant currency growth across all sales territories.

Rest of the world continues to experience healthy growth, with revenue of $8.2 million, increasing 25% year-over-year or 32% year-over-year on a constant currency basis. We've been making investments in these regions adding senior leadership and enhancing our go-to-market strategy and believe that we will see increasing opportunities there over the next several quarters.

During the quarter, 56% of license and first year maintenance was generated from our indirect partner channel, which is in line with the trends we have been experiencing. And our partners continue to be an important part of our overall growth story. We generated 58% of our license and first year maintenance from existing customers in the quarter and our land and expand strategy continues to work. We also added a significant number of new customers, which is an important piece of our growth strategy. But we would expect that on a quarterly basis, these percentages may fluctuate a bit.

During the quarter, we completed 86 deals over $100,000, compared to 104 in the same period last year. Included in this, we also closed 19 deals over $250,000, compared to 20 in the same period last year. These deals include license revenue plus first year maintenance. Overall, larger deals are representing an increased percentage of revenue as we scale our business. However, as we discussed with you, large deals were subject to more signatures, delays or downsizing, and this is reflected in the number of deals over $100,000.

Our headcount ending the quarter was 1,306, a 35% increase from a year ago period and a sequential increase of approximately 150 net new people.

Gross profit for the second quarter of 2012 was $76.2 million and represented a gross margin of 88.8%, compared to an 88.4% gross margin in the second quarter of 2011.

Operating expenses totaled $78.5 million in the second quarter, an increase of 14% compared to $69 million in the prior year. Compared to our expectations at April 26, several factors positively impacted our operating expenses during the second quarter. Our hiring and some R&D and G&A functions is a little behind plan, and this, along with lower sales commissions due to weaker than expected revenue, had a positive impact on operating expenses. In addition, the effects of currency movements during the quarter had a favorable impact of 2% on total operating expenses.

Now let's touch on operating and net income EPS. The press release we issued this afternoon shows these figures in both GAAP and non-GAAP form and explains the nature of the items excluded from the non-GAAP results. I want to call out some of the non-GAAP figures that we believe are meaningful indicators of trends in our business. Our non-GAAP operating income was $2.4 million for the second quarter, an improvement compared to a non-GAAP operating income of $1.4 million in the prior year period. Non-GAAP operating income excludes $4.4 million of stock-based compensation expense and $280,000 in employer payroll taxes on stock transactions. On a non-GAAP basis, our non-GAAP net income was $1.7 million for the second quarter of 2012 or $0.02 per diluted common share, compared to a non-GAAP net income of $1.2 million or $0.01 per diluted common share for the second quarter of 2011.

Moving to the balance sheet. Cash and cash equivalents totaled $195.1 million, an increase of $17.7 million as of June 30, 2012, compared to $177.4 million as of December 31, 2011. During the 6 months ended June 30, 2012, we generated $29.3 million in cash flow from operations, compared to $12.2 million for the same period last year.

Now let me turn to our thoughts on the third quarter and full year 2012. Our guidance assumes that the current economic conditions continue and that foreign exchange rates for the third quarter and full year will approximate current exchange rates.

Starting with the third quarter, we expect total revenue to be in the range of $87 million to $90 million, non-GAAP operating income to be in the range of $3 million to $5 million and non-GAAP net income per diluted common share of $0.02 to $0.04. Our expectation of non-GAAP net income per diluted common share for the third quarter exclude stock-based compensation expense, employer payroll taxes on stock transactions and amortization of intangible assets. It assumes an estimated long-term effective tax rate of 32% and weighted average shares outstanding of approximately 88 million.

For the full year 2012, we now expect total revenue to be in the range of $376 million to $386 million, an increase of approximately 19% over 2011 at the midpoint of the range. Non-GAAP operating income is expected to be in the range of $42 million to $47 million, translating into a non-GAAP operating margin of approximately 12% at the midpoint of the range. We continue to expect non-GAAP operating margin expansion versus the 10.8% we reported for 2011. Non-GAAP net income per diluted common share is expected to be in the range of $0.31 to $0.35. Our expectation of non-GAAP net income per diluted common share for the full year excludes stock-based compensation, employer payroll taxes on stock transactions and amortization of intangible assets. We assume an estimated long-term effective tax rate of 32% and weighted average shares outstanding of approximately 88 million.

With that, operator, I'd now like to turn it over to you to begin our Q&A session. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from John DiFucci from JPMorgan.

John S. DiFucci - JP Morgan Chase & Co, Research Division

Bill and Lars -- Bill, you just said that your guidance assumed that issues in Europe experienced in the second quarter will continue. I realize it's less than a month ago. It's almost a month ago. Have you seen anything at all in the field that would suggest that it's gotten any better or perhaps even any worse?

William G. Sorenson

I don't think it's gotten any worse, John. I wouldn't say we've necessarily seen anything better. I do think that in many of the cases, particularly in the larger transactions, what we did see is an extension of the selling process or the sales cycle, which is what we're taking into account for a number of the deals into Q3 and Q4. We're not getting any indications that those are being turned off at this point in time. So I would say we're still expecting a sort of temperate environment. But one of the questions we've asked ourselves though is that when you look to Q2, the real abruptness in which everything sort of shut down seems to be a cautiousness by people. And the question is whether that will continue or whether that was a reset of the expectations within the companies we do business with to sort of set them in place for the balance of the year. But overall, not seeing anything worse but not necessarily seeing anything better.

John S. DiFucci - JP Morgan Chase & Co, Research Division

You said the abruptness and I realize that you're quarter is, like most software companies, are back-end loaded. But was that abruptness seen just right at the end of the quarter? Or did you start to see that earlier?

William G. Sorenson

No. It was really very much at the end of the quarter. It was really mid to late June. We had been -- Lars and I had been out, speaking with folks such as yourself in early June, and we really had no indications at that point in time. We still had a good pipe. We still had a number of deals at the commit stage we were confident in closing. And really, in the last couple of weeks, you could feel the additional pressure being put on people and additional signatures being required. Can we cut the deal in half? Maybe we'll come back for the balance in Q3 or Q4. But it really was, I would say, characterized as pretty abrupt.

John S. DiFucci - JP Morgan Chase & Co, Research Division

And if I might just -- one last quick one. I -- we're all aware of the macro issues in Europe and we're all aware of your exposure there. But have you -- and are you just assuming that, that is the issue? Or are you considering any structural changes in the organization in Europe?

Lars Björk

John, Lars here. I don't think that we point to that to be the reason that we missed there. I think the reason is that to execute in this business environment, you need a different type of scrutiny. There is a regular beat [ph] that's needed. And that's what's being taken action on now. The pipeline is there. The business is there. You just have to put more work behind it to get it done and plan for it to take slightly longer time.

Operator

We'll take our next question from Adam Holt from Morgan Stanley.

Keith Weiss - Morgan Stanley, Research Division

This is actually Keith Weiss sitting in for Adam Holt. When I look at 3Q and the full year guidance, but 3Q in particular, it looks like at the midpoint, looking for revenue growth to step up a little bit from what we saw in 2Q, despite having more difficult comparison, it looks to be a similar kind of FX pressure on there. So my first question was, what gives you guys the confidence that you could see your growth step up into Q3?

Lars Björk

As I just answered John, I think we build that confidence on -- we have a very strong pipeline. We continue to see that larger deals are in play, but we are also very aware of that. There is another rigor and scrutiny that needs to happen on our side for them to be closed, and we probably need a longer sales cycle as well. But we're not seeing any signs of the market moving away. We're just seeing that there is a cautiousness out there probably coming from an uncertainty in the market.

Keith Weiss - Morgan Stanley, Research Division

Got it. I mean, would you be able to give us a little bit more color or give us some detail on some of the assumptions you might be changing -- you might be making to get to that guidance on close rates or pipeline coverage at that level of conservatism?

Lars Björk

We've spoken in the past about the value that either drive out of a solution like QlikView. This is top of mind now. So even if we have done as well in the past, we have to strengthen the message of what's the ROI for this particular client? How can we position our offering very early in the sales cycle and show the value? People are cautious holding onto their money. So if they're going to be leave their hand, they've got to see the return on it very, very quickly. That, I think, summarizes well where we are going to put our focus on, how can we enable the people that we have to be better equipped in this environment.

Keith Weiss - Morgan Stanley, Research Division

Got it. And on the preliminary call, you talked about some deals that had slipped out of 2Q. Have you guys seen any initial success in getting those deals closed on -- in Q3?

Lars Björk

Yes, we have. We are well on our way to having closed a portion of that.

Keith Weiss - Morgan Stanley, Research Division

Got it. And if I could maybe just sneak one last one on the expense side of the equation, what's the plan on hiring into the second half of the year? You guys kept up hiring in a pretty good pace into 2Q. Do you expect to slow that down at all? Or should we expect a similar type of pace?

William G. Sorenson

We're going to continue to hire. We still see a very, very large opportunity. We still think that the deals that we're working on today are going up come to fruition. We're very pleased with what we're seeing and encouraged by what we're seeing particularly on the enterprise side, the fact that the deals greater than $100,000 are representing a larger percentage of our total revenues. We're getting traction with major accounts, people like McAfee. So you're going to see us continue to invest in people in the second half of the year.

Keith Weiss - Morgan Stanley, Research Division

Would it be a similar case that we saw in the first half?

William G. Sorenson

We never comment on a forward-looking basis in terms of what our hiring will be. But if you go on our website, you certainly could see a number of open positions there.

Operator

And we'll take our next question from Tom Roderick from Stifel Nicolaus.

Chris Koh - Stifel, Nicolaus & Co., Inc., Research Division

This is Chris sitting in for Tom. So just if you guys could maybe clarify, I think, Lars, you had mentioned that you're evaluating your sales methodologies and I think you touched on it earlier. But just to clarify that point, is this more of kind of changing the pitch in terms of driving the ROI? Or is this more potentially maybe more structural in terms of shifting responsibilities within the sales force or shifting some operational methods that you feel like you might be able to get a little bit more productivity out of?

Lars Björk

I think it has to do more that you want to pinpoint the value as early in the sales cycle as possible rather than talk about the technical solution, because if we can't drive that value, then we should move on to something else and not leave ourselves spending time on things where the likelihood of the sales cycle just being prolonged or it being a dead-end street, which you'd find out earlier.

Chris Koh - Stifel, Nicolaus & Co., Inc., Research Division

Got it. And then how would you say -- I mean, that seems like it might be a bit of an adjustment for your sales force. So what steps have you taken to kind of make that adjustment as seamless as possible?

Lars Björk

Well, we took some steps several years ago and we are using a sales methodology that focuses on business value. And we are reinforcing this. We are strengthening the enablement team on the inside that helps out in sales situations and further equips the sales force.

Chris Koh - Stifel, Nicolaus & Co., Inc., Research Division

Got it, great. And then if you guys could maybe comment, of the $250,000 deals and up, were there any deals that were meaningfully over 7 figures perhaps?

Lars Björk

There -- we have done 7-figure deals. We're not commenting on how many.

Chris Koh - Stifel, Nicolaus & Co., Inc., Research Division

Great, got it. And then lastly, if I may, on the Deloitte relationship, I think you mentioned that you're expanding that into Canada and that they're going to start using Qlik internally to track their deals. So in terms of your SI partnerships in North America, how mature do you think they are? Do you think those are kind of tracking along as planned or they may be taking a little longer to percolate than you thought?

Lars Björk

I think they're tracking along as we planned, and planned it to be something that will take lot a longer time than you typically would expect. It's large organizations, but we are more and more building marketing activities with the leading ones and it should come to fruition.

Operator

And we'll take our next question from Steve Ashley from Robert W. Baird.

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

I was wondering, as part of this process, if you had gone back through the pipeline and kind of scrubbed it and rescored it as part of this kind of new world order you're looking at.

Lars Björk

The simple answer is yes. And it's after doing that exercise that we are still feeling confident for the next 6 months here. It's clearly a strong pipeline. There is a lot of deals, a lot of activities out there. It's just that it means a different type of sales approach to get it past the closing line. So it's not the size of the pipeline or the quality of the opportunities that is alluring to us.

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

In terms of vertical markets, now that you've had a little time, did you see any of the sales cycles linked in? Or was it more prominent in some vertical markets than others?

Lars Björk

No, no.

Operator

And our next question is from Brent Thill from UBS.

Nicole Hayashi - UBS Investment Bank, Research Division

This is Nicole Hayashi in for Brent. I was just hoping you would give a little more color on some the delayed deals that required further ROI justifications and how you can help them work through it.

Lars Björk

I think what happens in an uncertain time like this is that a lot of people lower their level for sign-off, where you need multiple signatures on a deal. And that requires that you got to get ahold of new people that might not have been on the horizon. They clearly also want to see what's the value of this investment, "Are we going to see payback in a very short period of time?" And this is nothing new to us. But it is certainly more -- there is -- it's more common now in deals. And the only thing we have to do is recombinate [ph] for this, be aware of the you are going to involve more people in the deal and you should do it earlier in the deal.

Operator

And we'll take our next question from Ross MacMillan from Jefferies.

Ross MacMillan - Jefferies & Company, Inc., Research Division

You obviously gave some metrics there, describing the deals over $100,000 and over $250,000. I was just curious, within those numbers, are the average deal sizes still increasing? So despite the volumes being down or the average deal size, the deal size is still going up?

Lars Björk

Yes, they are.

Ross MacMillan - Jefferies & Company, Inc., Research Division

That's helpful. And another question. Just given the pace of hiring you've done, it would strike me that you've got quite a lot of capacity that's still in -- being fettered up, if you will, in terms of productivity. So as you think about that and as you think about hiring, is there an opportunity to decelerate the hiring maybe quite significantly in the short term, get those folks you've hired to become productive and it still gives you the opportunity to reaccelerate hiring if you continue to see the opportunity grow? So just trying to get a sense for -- is this an opportunity just to kind of decelerate the hiring even just for the short term and then just see how things play out over the next 90 to 180 days?

Lars Björk

Sure, sure. I would say, yes. That opportunity is there. We always balance the 2 when we consider going into the next quarter. And on top of that, as you've seen in previous years, you typically hire most people at the beginning of the year. That's when talent is out on the road, and then that could very well be the same scenario this year. But you're absolutely right. The opportunity here to enable what we have and hold off a little bit on hiring could very well be something that we view.

Operator

And our next question is coming from Nathan Schneiderman from Roth Capital.

Shawn Yuan - Roth Capital Partners, LLC, Research Division

This is Shawn Yuan for Nathan. First quick question, the pipeline growth, can you quantify the growth in pipeline? What percentage? Is it up year-over-year? And also, you mentioned about those -- there were 7-figure deals closed during the quarter and if you look at the pipeline, how many of those bigger deals on pipeline? And can you quantify the growth in that area, too?

William G. Sorenson

The answer to all your questions is no. We don't really provide any detail relative to the pipe breakdown by setting the deals. We look at the pipeline relative to what we're expecting to close in the quarter. And what we see right now is what is leading us to give the guidance that were giving. So we don't provide that level of detail. Sorry.

Shawn Yuan - Roth Capital Partners, LLC, Research Division

That's okay. What is your currency of the cloud BI market? I mean, what's the thoughts on the market? And do you intend to pursue this market?

William G. Sorenson

We're not seeing a big cloud market in BI at this point in time. We still think you're seeing limitations relative to people with concerns regarding the security in terms of the security of their data. We also still see customers' concerned about latency in terms of moving large amounts of data. We have customers that are dealing with 50 gigabytes of data that they move back and forth. So we've not seen any real major pressure or interest in cloud. From a capability perspective, we work with a number of OEMs who could potentially provide something like that to customers. But as of yet, we have not necessarily seen that market develop.

Shawn Yuan - Roth Capital Partners, LLC, Research Division

And one last question, if I may. Can you update us on -- about the competitive, intense environment, especially comments on your competitors, Capital [ph], Microsoft, MicroStrategy and others? Who do you see often being usual during the quarter and who you don't see much during the quarter?

Lars Björk

I don't think we could single anyone out. It depends on what territory, what vertical and what size of company you are talking about. We still -- we see them all. I think the one that we see less of is probably Microsoft, of the ones you mentioned. But no material change to previous quarters.

Operator

And our next question is from Jesse Hulsing from Pacific Crest Securities.

Jesse Hulsing - Pacific Crest Securities, Inc., Research Division

You're inside sales initiative, how is that trending? How are hires in that group ramping their productivity versus maybe the rest of your sales organization?

William G. Sorenson

We continue to see very encouraging signs of inside sales. I wouldn't really comment, Jesse, publicly on whether we see the productivity is greater there than in our traditional sales channels, but we're very pleased by where we are with them. And as a result, we've continued investing. We've -- we're hiring a team in Singapore. They will be working and calling in Southeast Asia. We've expanded heads in Europe. So we do think that's an avenue that continues to hold promise for us, and we will continue to invest in that.

Jesse Hulsing - Pacific Crest Securities, Inc., Research Division

All right. And the Expressor Software acquisition, do you plan on folding components of this into your -- to the broader QlikView platform? What are your plans for Expressor from a technology perspective?

Lars Björk

Well, at this point, as you know -- it's a partnership since some time back. So we already have sold and have worked together. And as it stands now, we are planning to roll this out to our installed base. Whether we will integrate it into our standard QlikView offering, time will tell.

Jesse Hulsing - Pacific Crest Securities, Inc., Research Division

And last one. Obviously, the environment in Europe is tough. Are you seeing any carryover into the U.S.? Maybe any shift in decision-making over the first few weeks of this quarter? And what are your thoughts on federal government in Q3 and the pipeline there?

William G. Sorenson

Well, clearly, in some of the multinational companies, it means there are multinationals working on deals. Where we have seen some slow up, our expectation would be that there is concerns overall from spending level, but there is not anything specifically that they're pointing to. So our expectation would be they are taking a broader view and are potentially slowing down across the board. With that said, during the quarter, we did close a number of transactions with some major multinationals in other territories around the globe. So we did work with Monsanto. We closed a deal with Lenovo in Germany. We did a deal with Canon in Europe. So it really depends upon the customer and depends upon the individual business need that they have. But undoubtedly, the broader environment is, I think, impacting everyone and certainly the overall tone that you hear in the marketplace from customers is caution.

Operator

And our next question is from Walter Pritchard from Citigroup.

Robert Chen - Citigroup Inc, Research Division

This is Robert for Walter. First, a question on the pipeline. Did I read the guidance correctly in saying that the close rates that are assumed are sort of the same as Q2 but just a couple of months longer sales cycle?

William G. Sorenson

Robert, we're not commenting on close rates. What we're looking at is, obviously, the deals that moved out of Q2, deals that we think are still very much alive, as well as the deals that we have been working on for some time. So we're not necessarily giving guidance on our close rates. I think our expectation now is looking at the deals we have in our pipe and looking what happened in Q2. I think we're being cautious relative to what our expectations are about what will transpire. We're hoping at our initiatives at being very, very focused on return so that we can help our buyers make the final decision as opposed to merely being based upon spending levels. So we're putting particular focus on those things. So I think we still believe we have a very, very solid pipe. And we're not necessarily expecting something dramatic to happen in order to achieve the numbers that we put out there.

Robert Chen - Citigroup Inc, Research Division

Got it. And in terms of the maintenance described that seems to be a source of strength despite some of the license weakness, are the renewal rates on maintenance approaching or even crossing 90% yet?

William G. Sorenson

Well, I'm not going to comment on that one, Robert, in terms of the stats. What we are getting is basically catch-ups in many cases. We are getting partners, smaller partners working with their customers renewing, particular focus in international markets and European, as well as in Latin America. I think it has been a result of greater initiatives, working with our partners as well, working hand in hand with them. And that's an initiative we still think we have room to go on.

Robert Chen - Citigroup Inc, Research Division

Got it. And then lastly, on Expressor, is there any way to sort of quantify the revenue contribution in the full year guidance from Expressor?

William G. Sorenson

It's still too early to single that out at this point. We are seeing and tracking as we expected, but that would be something we would have to come back to in the coming quarters.

Operator

And we'll take our next question from Greg McDowell from JMP Securities.

Greg McDowell - JMP Securities LLC, Research Division

I was wondering, the strength in sales and the rest of the world, I think you said 32% constant currency growth. Could you just talk about where that came from? Was it Asia or Latin America or spread across the board? That's my first question.

William G. Sorenson

Latin America is included within Americas, and international is going to be pretty much weighted to the Asia-Pac quarter.

Greg McDowell - JMP Securities LLC, Research Division

Was there any specific country within Asia-Pac that outperformed in the quarter? I guess your expectations?

William G. Sorenson

I wouldn't say that, that outperformed. I would say overall, they performed well, just probably not as well as we would have wanted them to. We are always expecting more. But it wasn't necessarily anything pronounced in terms of providing upside. Certainly, some of the territories posed challenges more in terms of the business, doing business in local environment as opposed to economic macro issues, but nothing that I'd want to call out at this point, Greg.

Greg McDowell - JMP Securities LLC, Research Division

And then one quick one for Lars. I was wondering if you could just update us on the launch of QlikMarket and just maybe remind us of your strategy around QlikMarket.

Lars Björk

So we have an initiative going on now for the call for solutions, where partners send in solutions to us that we qualify for -- to a portal. And the intention is when we feel, which we will do this year, that there is enough to open up the market -- to the market, we will do so.

Operator

And we'll take our last question at the time from Ed Maguire from CLSA.

Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division

Lars and Bill, I just was interested to get your commentary on whether you felt any -- whether there's any need to adjust the emphasis or focus on certain types of partners or development of partners in certain regions as we look forward to the second half of the year based on your initial expectations. And as a follow-up, the QlikMarket question, whether you're also either playing to accelerate or deemphasizing the focus that you putting on QlikMarket.

Lars Björk

When we come to our partner communities, it's something we consistently develop depending on where the partners are and how they develop with us or what their intentions are. So if you look at how rich our universal partners are, I don't think we can make a meaningful shift in that in 6 months. We can certainly put emphasis behind certain type of partners. But if you look at the numbers, it wasn't as much the partners that failed in first quarter. They actually came out with a stronger number than they have done in previous quarters. So I think we continue to qualify. We continue to work with our partners to be successful. And we continue to attract partners, more and more so large partners as we go forward. And when it comes to QlikMarket, there's no intention to deinvest in this. We are very encouraged by the interest that we've seen from our -- primarily from our partner community. I think it can be a great marketplace for people to find their specific application to a solution and need that they have.

Operator

And that's all the questions we have for today. I would like to turn the conference back to your host.

Lars Björk

So before we end the call, I'd like to thank you all for joining us today. I would also like to thank our employees and partners for their efforts during the second quarter of 2012. Thank you.

Operator

Okay, ladies and gentlemen. This does conclude today's conference. You may now disconnect. Have a great day.

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